LECTURE 


AMERICAN 


CORRESPONDENCE  SC  iOOL 


OF  LAW 


PARTNERSHIP 


BY 

MAJ.  CHARLES   R    EVANS 

>ii 

Dean  of  the  Law  Department  of  the  University  of  Chattanooga. 


AMERICAN    COKRESroNDKNVi:    SCHOOL   OF   LAW 
CHICAGO,  U.  S.  A. 


T 

Ev  153 


COPYRIGHT  1908 

BV 

AMERICAN   CORRESPONDENCE   SCHOOL  OK   LAW 
CHICAGO 


- 


SKKTCH 

OF 

.MA.IUK  CHARLES  R.  EVANS. 

Charles  H.  i-;\an.s  \\as  born  in  Lancaster,  Grant  County,  Wis- 
consin, on  April  4-th,  1863.  After  a  thorough  preparatory  train- 
ing he  entered  the  University  of  Wisconsin,  from  which  he  was 
graduated  \sith  tin-  degree  of  A.  B.  in  1881.  He  then  engaged 
in  the  study  of  luw  and  was  admitted  to  the  bar  of  his  native 
>tate  in  1884  and  in  the  following  year  located  at  Chattanooga, 
Tennessee.  He  \s a>  elected  City  Attorney  in  1887  and  1888  and 
again  in  1891,  and  in  1892  was  the  Republican  candidate*  for 
.Judge  of  the  .Judicial  Circuit  in  which  Chattanooga  is  located. 

He  was  (•oimni.vsioiier  of  registration  in  1894  and  1895,  and 
County  Attorney  of  Hamilton  County,  Tennessee,  from  1894 
to  1898.  At  the  outbreak  of  the  Spanish  Am. man  war  he  re- 
signed tin-  latter  office  to  accept  a  commission  as  Captain  in  the 
(jth  United  States  Volunteer  Infantry  tendered  him  by  President 
M<  Kinley.  He  served  with  his  command  first  at  Camp  Thomas. 
Georgia,  and  afterwards  in  Porto  Rico.  On  January  7,  1899, 
he  was  promoted  to  the  rank  of  Major.  While  in  the  sen-ice 
Major  Kvans  became  familiar  with  military  law  and  served  in 
various  positions  on  numerous  courts-martial.  While  the  island 
of  Porto  Kico  was  under  martial  law  he  was  one  of  the  military 
judges  of  the  province  of  Arecibo.  He  was  honorably  mustered 
out  with  his  command  at  Savannah,  March  15,  1899.  Return- 
ing to  Chattanooga*  Major  Evans  resumed  the  practice  of  law 
and  wa>  aUo  elected  to  a  chair  in  the  Law  Department  of  Grant 
University,  now  the  University  of  Chattanooga.  In  1900  he 
wa>  a  candidate  for  presidential  elector-at-large  on  tin-  McKin- 
ley  and  Roosevelt  ticket, 'and  made  an  extensive  can\a>s  of  his 
state. 

In  1901  he  Ix-came  Dean  of  the  Law  Department  of  the 
Uni\er>ity  of  Chattanooga  and  under  his  .supervision  this  school 
of  law  has  become  one  cf  the  largest  and  Ix-st  in  the  Southern 
States,  drawing  many  students  from  all  the  states  of  the  nation 
and  numbers  from  abroad. 

Major  Evans  l:-:th  as  a  lawyer  and  as  a  lectuivr  on  law,  ranks 
among  the  first  in  tie  South  and  has  U-en  engaged  in  many  im- 
portant legal  battles  in  the  state  and  federal  courts.  In  1907 
liis  filmn  muter  conferred  UJXMI  him  the  degree  of  A.  M.  He  is 
a  member  of  the  American  Bar  Association  ami  of  the  Naval 
and  Military  Order  of  the  Spanish-American  War. 


PARTNERSHIP. 


I. 

Origin  of  the  Law  of  Partnership. 

The  body  of  rules  which  constitutes  the  modern  law 
of  partnership  is  a  growth  having  its  sources  in  the 
Common  Law  of  England,  the  Civil  Law  of  Rome  and 
the  Law  Merchant.  Its  beginnings  are  older  than  re- 
corded history  and  traces  of  it  are  found  among  the  most 
savage  of  tribes.  Far  beyond  the  confines  of  civiliza- 
tion, among  those  who  lead  the  rudest  lives,  such  as 
hunters  and  trappers,  its  elemental  principals  are 
vaguely  recognized  and  respected.  A  faint  conception 
is  found  in  forms  of  life  lower  than  that  of  man,  as 
when  beasts  of  prey  combine  their  courage,  cunning, 
strength  and  instinct  to  share  the  dangers  and  rewards 
of  the  chase  in  order  that  these  fierce  partners  of  the 
wild  may  live  and  thrive.  With  the  advance  of  civiliza- 
tion and  the  higher  specialization  of  modern  life,  the  law 
of  partnership  has  been  amplified  and  perfected  into  that 
system  of  rules  which  govern  the  unincorporated  busi- 
ness associations  of  today.  In  England  and  in  several 
of  the  American  States  the  law  of  partnership  has  been 
-Codified. 

II. 

Partnership  Defined. 

Partnership  is  a  legal  relatinu.  based  njion  the  express 
or  implied  contract  of  t:co  or  more  competent  person* 
to  unite  their  projierttf.  labor  or  xkill  in  some  lawful  busi- 
ncsft  carried  on  on  all  or  anif  of  them  on  behalf  of  all  of 


8  American  Correspondence  School  of  Law. 

them  for  their  joint  profit.  There  are  many  definitions 
of  "partnership,"  but  so  unsatisfactory  are  they,  that 
one  able  writer  on  this  subject  gives  no  definition  in  his 
work,  and  contents  himself  with  pointing  out  the  lead- 
ing ideas  involved  in  the  term.  A  partnership  is  often 
called  a  contract,  but  this  is  inaccurate.  Its  inception 
is  in  a  contract,  but  when  once  established  it  becomes  a 
relationship  or  a  status,  just  as  marriage  is  a  status 
growing  out  of  a  contract.  This  contract  out  of  which 
the  status  of  partnership  arises  is  a  common  law  contract 
and  is  subject  to  all  the  general  rules  affecting  such  con- 
tracts, such  as  the  necessity  of  competent  parties,  con- 
sideration, legality  of  object,  the  effect  of  infancy, 
coverture,  insanity,  drunkenness,  fraud,  duress,  the 
statute  of  frauds  and  the  like.  With  all  these  principles 
the  student  of  this  subject  is  presumed  to  be 
familiar  and  the  limits  of  this  review  lecture  preclude 
any  exhaustive  treatise  of  them.  The  firmer  the  stu- 
dent's grasp  of  the  law  common  to  all  forms  of  contracts 
the  more  he  knows  of  partnership  law  and  the  more 
easily  he  comprehends  those  principles  especially  appli- 
cable to  this  subject. 

III. 

How  Partnership  Is  Created. 

To  create  a  partnership  two  things  must  concur: 
1.  There  must  be  a  valid  agreement  to  enter  into  it.  2. 
The  agreement  must  be  executed,  or  acted  upon.  By  a 
valid  agreement  is  meant  that  the  partnership  contract, 
or  articles  of  agreement  between  the  parties,  must  have 
the  ordinary  essentials  of  a  binding  legal  contract,  and 
that  the  partnership  should  have  a  legal  object.  A 
partnership  can  be  created  only  by  an  agreement  between 


I'tirtnt-rxhiji.  <) 

the  parties,  either  express  or  implied,  and  is  never  cre- 
ated by  operation  of  law.  This  principle  known  as 
delectus  jnrtt<infirnnt  (choice  of  persons)  is  a  very  im- 
portant rule.  The  reason  is  clear.  One  may  be  com- 
pelled by  law  to  cany  out  an  ordinary  contract  he  has 
made  with  a  decedent,  even  though  he  knows  the  legal 
representative  with  whom  he  has  to  deal  is  a  rascal,  but 
if  the  decedent  was  his  partner  at  the  time  of  his  death, 
this  rule  protects  him  against  the  imposition  of  a  scoun- 
drel or  an  incompetent  in  the  relationship  of  mutual 
trust,  confidence  and  good  faith  necessary  to  a  partner- 
ship. The  only  exceptions  to  this  rule  are  mining  part- 
nerships and  joint-stock  companies,  to  be  noted  later.  A 
legal  object  is  absolutely  essential.  An  agreement  to 
enter  into  the  Vocation  of  highway  robbery  or  other  vio- 
lation of  law,  with  a  division  of  the  spoils,  is  a  nudnni 
pactum  and  without  the  pale  of  the  law's  protection. 
The  contract  which  creates  the  partnership  may  be  either 
oral  or  in  writing.  If  the  partnership  is  of  such  nature 
or  for  such  duration  that  the  statute  of  frauds  requires 
a  written  agreement,  then  a  formal  written  agreement 
should  be  drawn  up  and  signed  by  the  parties.  When 
such  written  agreement  is  entered  into,  setting  forth 
the  terms,  rights,  duties  and  liabilities,  whether  required 
by  the  statute  of  frauds  or  not,  it  is  called  the  "Articles 
of  Partnership,"  ;the  true  meaning  of  which  is  deter- 
mined by  the  ordinary  rules  governing  the  construction 
of  contracts.  Until  there  is  something  done  to  earn-  out 
the  agreement  and  consummate,  or  launch,  the  partner- 
ship, the  agreement  is  merely  a  contract  for  a  partner- 
ship, and  the  status  of  partnership  has  not  come  into 
being.  A  breach  of  such  an  agreement  gives  the  in- 
jured party  a  right  of  action  for  damages,  but  only  in 
exceptional  cases  will  a  court  of  equity  enforce  a  specific 


10  American  Correspondence  School  of  Law. 

performance.  "It  is  impossible  to  make  persons  who 
will  not  concur  carry  on  a  business,  jointly,  for  their  own 
common  advantage."  When  a  date  is  set  in  the  articles 
for  the  commencement  of  the  partnership,  it  is  presumed 
to  have  commenced  on  that  date  in  the  absence  of  other 
evidence.  Where  the  partnership  is  implied  from  facts, 
it  will  be  presumed  to  have  commenced  when  those  facts 
transpired.  Whether  or  not  a  partnership  exists  in  a 
given  case,  may  be  either  a  question  of  law  or  of  fact. 
If  the  facts  are  in  dispute,  it  is  a  question  of  fact  for 
the  jury;  if  the  facts  are  admitted,  it  is  a  question  of  law 
for  the  court.  The  burden  of  proving  the  existence  of 
a  partnership  and  identifying  the  partners  rests  upon 
the  party  asserting  these  facts. 

IV. 

Who  May  Become  Partners. 

Any  number  of  competent  persons,  more  than  one, 
unless  the  number  is  limited  by  statute,  may  enter  into 
a  partnership.  Any  person  who  is  capable  of  contract- 
ing generally  may  be  a  partner.  This  excludes  alien 
enemies,  idiots,  lunatics  and  married  women,  unless  ena- 
bled by  statute.  -  A  contract  of  partnership  made  by  an 
infant  is  held  to  be  voidable  and  not  void,  and  he  is  held 
liable  in  any  case  to  the  extent  of  the  profits  he  has  re- 
ceived. He  may  at  any  time  before  maturity  set  up  his 
infancy  against  personal  liability  as  a  partner,  but  he 
may  not  recover  from  the  firm  his  contribution  thereto 
unless  he  has  been  induced  to  enter  the  firm  through 
fraud.  The  infant's  interest  in  the  firm  property  re- 
mains liable  for  the  firm  debts,  notwithstanding  the  in- 
fant elects  to  disaffirm.  The  adult  partners  cannot  take 
advantage  of  their  co-partner's  infancy  to  avoid  liabil- 


11 

ity.  The  privilege  is  personal  to  the  infant.  At  major- 
ity the  infant  partner  may  ratify  liis  partnership  trans- 
actions and  bind  himself  for  obligations  incurred  during 
minority.  Corporations  cannot  become  partners  uii  i 
other  corporations  or  with  natural  persons  unless  ex- 
pressly authorized  so  to  do  by  charter;  and  such  un- 
authori/ed  act  would  he  jirinta  facie  ultra  rirat.  A  firm 
may  form  a  partnership  with  another  firm  or  with  an  in- 
dividual, and  between  themselves  will  be  treated  as  enti- 
ties, but  so  far  as  third  parties  are  concerned,  all  the 
partners  in  the  component  firms  will  he  regarded  as 
partners  in  the  joint  firm  in  solido  for  the  debts  of  the 
joint  firm.  The  death  of  a  partner  does  not  make  his 
personal  representative  a  member  of  the  firm,  nor  < 
the  sale  of  a  partner's  interest  make  the  purchaser  a 
member,  without  the  consent  of  the  other  partners,  the 
rule  of  delect  ax  jicrxonannn  applying. 

V. 

Kinds  of  I'artiicnt. 

As  regards  the  relationship  of  a  partner  to  his  firm  or 
to  third  persons,  he  may  belong  to  one  or  more  of  the 
following  classes,  designated  as:  Ostensible,  Secret, 
Active,  Silent,  Dormant,  Nominal,  Incoming,  Retiring. 
Liquidating,  General  and  Special  partners. 

An  Ostensible  partner  is  one  who  is  held  out  to  the 
public  and  known  as  a  partner,  as  by  being  joined  in  the 
name,  sign,  letter-heads,  and  the  like. 

A  Secret  partner  is  one  whose  relationship  to  the  firm 
is  concealed  from  the  public  and  known  only  among  the 
members  of  the  firm. 

An  Active  partner  is  one  who  takes  an  active  part  in 
;i"  conduct  of  the  firm  business.  Tie  may  be  either  an 
ostensible  or  a  secret  partner. 


12  American  Correspondence  School  of  Law. 

A  Silent  partner  is  one  who  takes  no  active  part  what- 
ever in  the  business  of  the  firm,  and  exercises  none  of  the 
rights  of  a  partner  beyond  receiving  his  share  -of  the 
profits. 

A  Dormant  partner  is  one  who  is  both  secret  and 
silent.  He  is  unknown  to  the  public  and  inactive  con- 
cerning the  firm's  affairs. 

A  Nominal  partner  is  one  who,  though  not  a  partner 
in  fact,  is  held  out  to  the  public  as  a  partner,  with  his 
own  consent,  so  as  to  make  him  liable  as  a  partner,  on 
the  ground  that  he  has  given  credit  to  the  firm,  and 
authorized  transactions  on  his  responsibility. 

A  person  who  enters  an  existing  firm  is  called  an  in- 
coming partner;  and  one  who  retires  from  such  a  firm  is 
designated  a  retiring  partner. 

A  Liquidating  partner  is  the  member  of  a  dissolved 
partnership  who  winds  up  its  business. 

A  General  partner  is  one  who,  as  a  member  of  a  limit- 
ed partnership  transacts  the  business  of  the  firm;  whose 
name  is  used  in  the  firm  name,  and  who  is  liable  to  the 
full  amount  for  the  debts  and  obligations  of  the  firm. 

A  Special  partner  is  one  who  contributes  a  special 
amount  of  capital  to  a  limited  partnership,  and  who,  by 
complying  with  the  provisions  of  the  law  under  which 
the  limited  partnership  exists,  is  not  liable  for  the  debts 
of  the  firm  beyond  the  amount  which  he  contributes. 

The  last  two  terms  have  reference  only  to  members  of 
a  statutory  limited  partnership. 

VI. 

Kinds  of  Partnership. 

Partnerships  classified  with  reference  to  the  nature  of 
the  association  are  either: 


IS 

(a)  Ordinary  or  General  partnerships,    . 

(b)  Limited  partnerships,  or 

(c)  Joint-stock  companies. 

Partnerships  classified  with  reference  to  their  extent 
arc  either: 

(a)  Universal  partnerships, 

(b)  General  partnerships,  or 

(c)  Special  or  particular  partnerships. 

Partnerships  classified  with  reference  to  their  business 
are  either: 

(a)  Trading  partnerships,  or 

(b)  Non-trading  partnerships. 

An  Ordinary  or  General  partnership  is  one  in  which 
the  partners  have  united  for  the  purpose  of  conducting 
some  kind  of  a  business  as  it  is  usually  carried  on. 

A  Limited  partnership  is  one  in  which  the  liability  of 
one  or  more  of  the  partners  for  losses  and  firm  debts  is 
restricted  to  a  definite  amount. 

A  Joint-stock  company  is  a  species  of  partnership, 
the  capital  stock  of  which  is  divided  into  shares  which 
are  transferable  at  the  will  of  the  holder.  Dclcctii*  jicr- 
xonaruni  has  no  application  in  such  an  association. 

A  Universal  partnership  is  one  in  which  the  parties 
bring  into  the  firm  all  their  property,  of  whatever 
nature,  and  employ  all  their  services  for  the  common 
benefit.  Such  partnerships  are  uncommon  but  several 
cases  have  occurred. 

A  Special  partnership  is  one  created  for  the  conduct 
of  a  single  adventure  or  enterprise. 

A  Trading  or  Commercial  partnership  is  one  whose 
business  consists  in  buying  or  preparing  for  sale  and 
selling  commodities  for  profit. 


14  American  Correspondence  School  of  Law. 

A  Non-trading  partnership  is  one  engaged  in  the 
prosecution  of  some  occupation  or  calling  not  of  a  com- 
mercial character.  A  partnership  between  attorneys  for 
the  practice  of  the  profession,  or  between  architects  or 
between  factors  and  brokers  are  types  of  such  partner- 
ships. 

In  addition  to  those  noted  should  be  mentioned  "min- 
ing partnerships."  In  mining  partnerships  there  is  no 
delectus  personarum  and  the  share  of  any  partner  may 
be  freely  transferred  by  death  or  assignment,  without 
the  consent  of  copartners,  and  without  working  a  disso- 
lution. 

A  sub-partnership  exists  where  one  partner  in  an 
existing  firm  agrees  to  share  his  proportion  of  the  pro- 
fits with  a  third  person  in  such  a  manner  as  to  constitute 
himself  and  such  third  person  partners.  It  is  a  partner- 
ship within  a  partnership,  but  this  does  not  make  the 
stranger  a  partner  in  the  original  firm,  as  delectus  per- 
sonarum forbids  this.  It  makes  the  parties  to  it  part- 
ners inter  se.  Confusion  exists  as  to  the  liability  of  a 
subpartner  for  firm  debts.  Authorities  hold  both  ways. 

VII. 

Purposes  of  Partnership. 

A  partnership  may  be  formed  for  the  carrying  on  of 
any  lawful  business  or  vocation.  But  a  personal 
office,  as  a  public  office  of  any  kind,  is  not.  to  be  made 
the  subject  of  a  partnership.  At  common  law  land  was 
not  a  natural  subject  of  commerce,  but  now  a  partner- 
ship may  exist  for  dealing  In  land  or  for  improving  land. 
Farming  on  shares  does  not  constitute  a  partnership, 
but  only  the  relation  of  landlord  and  tenant,  but  parties 
may  agree  to  be  partners  in  farming.  A  partnership 


1.") 

formed  for  an  illegal  purpose  or  for  the  perpetration  of 
crime  is  void.  No  rights  between  such  partners  would  be 
recognized  by  the  courts,  although  third  persons  inno- 
cent of  wrongdoing  may  sue  the  members  of  such  part- 
nership. 

VIII. 
Tests  of  a  Partnership. 

A  question  of  frequent  occurrence  is,  whether  or  not 
the  relation  existing  between  two  or  more  parties  is 
a  partnership?  Until  the  year  1860,  the  law  was  uni- 
versally regarded  as  settled,  that  all  persons  sharing  the 
profits  of  a  business  were  held  liable  as  partners  to  third 
persons  for  the  debts  of  such  business,  whether  they  were 
really  partners,  as  between  themselves,  or  not.  All 
traces  of  this  doctrine  have  not  yet  disappeared.  While 
this  view  prevailed,  it  was  held  that  one  who  received  a 
share  in  the  profits  as  compensation  in  lieu  of  salary 
for  services  rendered,  or  rent  of  property  used  in  the 
business,  or  interest  on,  or  in  payment  of  money  loaned, 
was  liable  as  a  partner  to  third  persons  for  the  debts  <>i 
the  firm,  irrespective  of  the  actual  intent  of  the  parties, 
and  that  it  was  immaterial  whether  they  were  partners 
inter  se  or  not.  The  reason  assigned  for  this  harsh  rule, 
was  that  "if  any  one  takes  part  of  the  profit,  he  takes  a 
part  of  that  fund  upon  which  the  creditor  of  the  trader 
relies  for  repayment."  The  modern  doctrine  which  now 
prevails  in  England  and  which  has  l>cen  followed  l>y 
nearly  all  of  the  American  states,  holds,  that  persons  are 
not  liable  to  third  parties  as  partners,  although  t hex- 
share  profits,  unless,  (a)  They  are  really  parties  inter  se, 
or,  (b)  Have  held  themselves  out  as  partners  under  sueli 
circumstances  as  to  estop  them  from  denying  it.  This 


16  American  Correspondence  School  of  Law. 

rule  dates  from  the  decision  in  1860  by  the  English 
House  of  Lords,  of  the  leading  case  of  Cox  v.  Hickman 
(8  H.  L.  Cas.  268).  This  decision  shattered  the  old 
rule.  "It  put  an  end  to  two  notions  which  had  there- 
tofore been  regarded  as  fundamental:  First,  that  third 
persons  may  hold  to  the  liability  of  partners  those 
who,  in  fact,  are  not  partners,  merely  because  some  other 
relation  exists  between  them ;  and,  second,  that  participa- 
tion in  the  profits  of  a  business  is  conclusive  of  a  part- 
nership." The  rule  still  prevails  that  participation  in  the 
profits  of  a  business  raises  a  presumption  of  the  existence 
of  a  partnership,  and  prima  facie  establishes  the  fact, 
but  this  presumption  is  no  longer  conclusive  and  may 
now  be  rebutted. 

If  the  parties  expressly  intended  to  become  partners, 
their  intention  usually  governs,  but  unless  their  contract 
and  the  relation  assumed  constitutes  a  partnership,  the 
mere  fact  that  they  intended  a  partnership  or  called  it 
so,  will  not  answer. 

Where  the  parties  allege  that  they  did  not  intend  to 
become  partners  the  question  is  more  complicated.  While 
the  general  rule  is  stated  to  be  that  there  can  be  no  part- 
nership between  the  parties  if  they  did  not  intend  one, 
yet  if  the  legal  effect  of  the  agreement  between  them  is 
to  constitute  a  partnership,  it  will  be  so  held,  and  further, 
if  a  person  though  not  a  partner,  conducts  himself  to- 
ward third  persons  as  to  reasonably  induce  them  to  rely 
upon  him  as  a  partner,  he  will  be  estopped  from  denying 
his  liability  as  a  partner.  This  is  said  to  be  a  partner- 
ship as  to  third  persons,  or  a  quasi-partnership,  to  dis- 
tinguish it  from  a  true  partnership.  This  holding 
oneself  out  to  be  a  partner  making  himself  liable  as 
such  may  result  from  (a)  His  own  direct  act  or  declara- 
tion, (b)  He  may  be  represented  as  an  actual  member 


17 

by  the  partners  with  his  consent,  (c)  Or  he  may  be  held 
out  by  the  other  partners  with  his  knowledge  and  with- 
out his  prohibition.  In  all  these  cues  his  liability  is  the 
same,  toward  all  persons  who  deal  with  the  firm  on  the 
credit  of  Ins  name. 

It  would  therefore  seem  that  the  true  test  of  partner- 
ship inter  -sr,  is  not  profit  sharing,  nor  mutual  agency, 
(both  attributes  of  true  partnerships),  but  the  inten- 
tion of  the  parties,  as  gathered  from  a  construction  of 
the  contract  they  have  made.  If  the  thing  they  have 
done  constitutes  a  partnership  by  construction  of  law, 
they  are  ipso  facto  partners,  and  an  express  stipulation 
that  they  did  not  intend  to  form  a  partnership,  simply 
shows  that  they  have  mistaken  the  legal  effect  of  the 
agreement  entered  into. 

It  sometimes  happens  that  a  supposed  corporation  has 
been  defectively  organized.  The  question  then  arises, 
are  the  members  of  such  a  corporation  to  receive  the  pro- 
tection of  the  corporation  laws  against  individual  lia- 
bility for  the  debts  of  such  a  concern  or  are  they  to  be 
held  liable  as  partners  in  a  linn!'  The  authorities  are 
not  in  harmony.  Some  hold  them  liable  as  partners  in 
every  case  in  which  the  corporation  fails  and  others  deny- 
ing that  they  are  partners  if  a  corporation  was  intended. 
Professor  Mecham  states  the  true  test  of  determining 
their  status  to  be  whether  or  not  a  corporation  was  ] 
ble  to  the  parties.  If  it  was  not,  as  in  the  absence  of 
legislative  authority,  then  the  parties  are  liable  as  part- 
ners; but  if  incorporation  was  possible  and  was  honest  1\ 
attempted  in  good  faith,  then  the  parties  are  not  part- 
ners, as  they  may  be  regarded  as  having  formed  a  cor- 
poration dc  facto. 


18  American  Correspondence  School  of  Laic. 

IX. 

The  Capital  of  the  Firm. 

So  far  we  have  treated  of  the  formation  of  a  partner- 
ship. We  will  now  consider  the  incidents  and  principles 
which  regulate  the  partnership  during  its  existence. 

The  capital  of  a  firm  is  the  aggregate  of  the  amounts 
to  be  contributed  by  the  partners  as  the  basis  of  begin- 
ning or  continuing  the  partnership  business.  The  con- 
tributions may  be  money  or  any  other  kind  of  property 
in  which  a  joint  ownership  may  be  had  and  which  can 
be  reached  by  creditors,  and  in  whatever  shape  contrib- 
uted it  becomes  at  once  the  property  of  the  firm,  each 
partner  having  a  joint  interest  in  the  whole,  but  no 
separate  interest  in  any  particular  part,  and  where 
profits  are  to  be  divided  in  proportion  to  capital, 
neither  party  can  increase  or  diminish  his  share  with- 
out the  consent  of  the  other.  Partnership  capital  is 
partnership  property,  but  the  two  terms  "partnership 
capital"  and  "partnership  property"  must  not  be  con- 
fused. Partnership  property  includes  everything  be- 
longing to  the  firm,  and  its  amount  may  vary  from  day 
to  day,  while  the  partnership  capital  is  a  sum  fixed  by 
the  agreement  of  the  partners,  and  does  not  vary 
although  it  may  be  impaired  by  losses.  Upon  dissolu- 
tion of  the  firm,  the  capital  is  to  be  returned  to  the  part- 
ners contributing  it,  in  the  proportion  in  which  it  was 
contributed.  Where  there  is  nothing  to  show  the  amount, 
the  various  contributions  will  be  presumed  to  have  been 
equal. 

It  is  a  well  settled  principle  of  law  that  only  a  person 
natural  or  artificial  (corporation),  that  is  a  legal  entity, 
can  be  vested  with  the  title  to  real  estate.  As  a  firm  is 
not  a  legal  person  it  can  not  take  title  to  real  property  in 


|  <) 

the  firm  name.  Where  a  deed  is  made  to  a  partnership 
in  its  firm  mum-,  and  such  firm  name  contains  the  indi- 
vidual names  of  one  or  more  of  tin-  partners,  the  legal 
title  will  vest  in  such  of  the  partners  as  are  named  in  the 
firm  name,  and  therefore  in  the  deed,  and  in  them  only. 
The  effect  is  that  of  a  resulting  trust  for  the  partner- 
ship and  the  property  is  deemed  partnership  property, 
and  is  subject  to  all  the  incidents  thereof.  Where  real 
property  is  so  held,  a  purchaser  from  the  holder  of  the 
legal  title,  without  notice  of  the  partnership,  acquires 
a  good  title.  The  firm  real  estate  in  the  name  of 
a  deceased  partner  goes  to  the  heir  in  trust  for  the 
settlement  of  partnership  debts,  and  equity  will  com- 
pel the  conveyance  of  the  legal  title  to  the  surviving 
partner  for  the  settlement  of  the  firm  business.  The 
general  rule  in  the  United  States  is  that  where  real  estate 
forms  any  part  of  the  partnership  property  it  is  to  be 
treated  as  such,  though  the  firm  consider  it  as  personalty. 
lint  in  equity  it  will  be  treated  as  personal  pro|x?rty  to 
meet  the  debts  of  the  partnership  and  wind  up  the  busi- 
ness, and  after  that  as  realty. 

X. 

Title  to  Firm  Pro  pert  if. 

A  partnership,  as  such,  may  acquire,  hold,  and  trans- 
fer personal  property  and  contract  in  reference  thereto 
in  its  firm  name.  The  partners  are  co-owners  and  co- 
proprietors  of  the  firm  property.  The  partners  are 
neither  tenants  in  common  nor  joint-tenants,  although 
an  estate  in  partnership  has  many  of  the  characteristics 
of  estates  in  common  and  in  joint  tenancy.  A  partner's 
interest  in  the  firm  property  simply  cntitVs  him  to  a 
given  proportion  of  what  remains  after  UK  firm  d- 


20  American  Correspondence  School  of  Law. 

are  paid.  This  estate  in  partnership  is  a  modified  form 
of  joint-tenancy  and  is  marked  by  the  following  charac- 
teristics: 1.  If  a  separate  execution  issues  it  covers  only 
the  debtor's  interest  in  the  firm,  and  an  accounting  must 
be  had  to  determine  his  interest.  2.  Upon  the  death  of 
a  partner,  the  surviving  partner  alone  can  wind  up  the 
business,  and  the  personal  representative's  rights  are 
simply  to  compel  him  to  do  so.  3.  If  a  partner  sells  his 
interest  to  his  co-partner,  accounts  standing  against  him 
on  the  books  are  extinguished,  as  they  are  not  debts  but 
items  of  the  general  account.  The  partner  cannot  as- 
sign, sell  or  mortgage  any  portion  of  the  firm  property 
as  his  own  share,  but  may  transfer  his  interest  in  the 
whole  business,  and  such  sale  works  a  dissolution  of  the 
partnership,  and  upon  settling  the  business  the  interest 
of  the  assignee  is  determined.  4.  In  the  absence  of 
agreement  the  profits  are  divided  equally,  no  matter  how 
the  property  was  contributed.  Losses  are  to  be  borne 
in  the  same  proportion.  But  this  rule  does  not  apply  to 
the  division  of  capital  as  has  been  shown  before. 

As  a  general  rule  the  members  of  a  firm  are  not  enti- 
tled to  statutory  exemptions  out  of  their  share  of  firm 
property,  as  an  exemption  is  an  individual  and  not  a 
firm  privilege,  although  some  states  provide  that  this 
may  be  done. 

XI. 

Firm  Name. 

It  is  not  absolutely  essential  to  a  partnership  that  it 
should  have  a  firm  name,  but  its  convenience  is  so  great 
that  most  partnerships  adopt  a  name  under  which  the 
business  is  transacted.  This  firm  name  may  include  the 
names  of  all  the  partners  or  any  one  or  more  of  them 
or  it  may  be  a  purely  fanciful  one,  changeable  at 


21 

pleasure.  Any  name  may  be  adopted,  except  one  pur- 
porting to  be  a  corporate  name,  or  which  has  been  used 
by  another  person,  firm  or  company,  and  has  become 
associated  with  and  appropriated  to  their  business. 
Some  states  prohibit  the  use  of  the  name  of  any  one  not 
a  partner,  or  the  suffix  "&  Co.,"  unless  such  suffix  stands 
for  an  actual  partner  or  partners,  who  are  not  otherwise 
named.  The  name  of  the  firm  if  of  value  may  be  treated 
as  an  asset  and  disposed  of  as  such. 

XII. 

Good  icill. 

The  good-will  is  the  favor  and  patronage  which  the 
firm  has  won  by  fair  dealing  from  the  public  and  the 
probability  that  it  will  continue.  It  has  sueh  a  value 
that  it  is  entitled  to  be  classified  as  firm  property.  As 
a  rule  it  belongs  to  the  business  and  not  to  the  place, 
except  in  cases  of  hotels,  theaters  and  the  like.  It  does 
not  pass  with  a  sale  of  the  stoek  but  does  pass  with  the 
sale  of  the  business  and  upon  dissolution  is  an  asset  to  be 
accounted  for  like  other  property. 

XIII. 

Implied  P  triers  of  Part  tiers. 

As  between  themselves  parties  becoming  partners  may 
limit  by  agreement  the  powers  to  l>e  exercised  by  indi- 
vidual partners,  but  in  the  absence  of  such  agreement, 
or  in  dealing  with  third  persons  who  have  no  notice  of 
the  limitations  imposed,  each  partner  implicdly  p»xs 
certain  usual  and  ordinary  powers  in  dealing  with  the 
firm  business  and  property.  Every  partner  is  implicdly 
the  general  agent  of  the  firm  in  all  matters  connected 
with  the  firm's  business.  The  authority  of  a  partner  to 


2£  American  Correspondence  School  of  Law. 

bind  the  firm  in  dealing  with  third  parties,  is  derived  in 
two  ways:  1.  It  may  be  a  real  authority  derived  from 
the  articles  of  co-partnership,  or  from  the  nature  of  the 
business  in  the  absence  of  articles.  2.  It  may  be  the 
apparent  authority  derived  from  the  nature  of  the  busi- 
ness, though  actually  restricted  by  the  partnership 
articles. 

These  implied  powers  of  a  partner  are  limited  to  those 
acts  within  the  usual  and  ordinary  scope  of  the  firm's 
business.  He  has  no  implied  power  to  bind  his  firm  out- 
side the  scope  of  the  business  as  usually  carried  on.  A 
partner  has  implied  power  to  bind  his  firm  by  appoint- 
ing agents,  engaging  servants,  rendering  accounts,  re- 
ceiving notice,  making  purchases,  accepting  payments, 
selling  chattels,  receiving  bills  in  payment  of  firm  debts, 
making  and  accepting  tenders,  and  in  case  of  trading 
partnerships,  by  borrowing  money  necessary  to  carry  on 
partnership  business,  making  and  giving  firm  paper, 
mortgaging  and  pledging  personal  property,  and  ac- 
cepting and  indorsing  paper  in  firm  name.  A  partner 
may  sue  and  defend  suits  in  the  firm  name,  but  must  in- 
demnify the  other  partners  if  he  acts  without  their  con- 
sent. He  has  no  implied  power  to  submit  a  controversy 
to  arbitration,  confess  a  judgment,  make  an  assignment 
for  the  benefit  of  creditors,  make  a  guaranty,  or  execute 
a  deed,  mortgage  or  lease  of  realty,  or  to  bind  the  firm 
by  a  sealed  instrument,  except  a  release. 

In  the  management  of  the  internal  affairs  of  a  part- 
nership and  conducting  its  business,  a  majority  of  the 
partners  have  the  right  to  control  as  against  the  minorit)r 
but  this  does  not  authorize  them  to  take  up  a  new  kind 
of  business,  or  change  the  nature  of  the  business. 


XIV. 

Rights  and  Duties  of  Partners. 

Partnership  being  a  confidential  relation,  partners  are 
bound  to  observe  the  highest  degree  of  good  faith  to- 
ward each  other.  Hence  a  partner  can  never  lawfully 
prefer  his  own  interest  to  that  of  the  firm.  A  partner 
will  not  be  permitted  to  obtain 'for  himself  profits  or 
benefits  arising  from  a  transaction  concerning  firm  in- 
terest. "Good  faith  requires  that  a  partner  shall  not 
obtain  a  private  advantage  at  the  expense  of  the  firm. 
He  is  bound  in  all  transactions  affecting  the  partnership, 
to  do  his  best  for  the  common  body,  and  to  share  with 
his  co-partners  any  benefit  which  he  may  have  obtained 
from  other  people,  and  in  which  the  firm  is,  in  honor 
and  conscience,  entitled  to  participate."  In  Latta  v.  Kil- 
bourn,  150  U.  S.  524,  541,  Mr.  Justice  Jackson,  speak- 
ing for  the  court,  said  that  "it  is  well  settled  that  one 
partner  cannot,  directly  or  indirectly,  use  partnership 
assets  for  his  own  benefit;  that  he  cannot,  in  conducting 
the  business  of  a  partnership,  take  any  profit  clandes- 
tinely for  himself;  that  he  cannot  carry  on  the  business 
of  the  partnership  for  his  private  advantage;  that  he 
cannot  carry  on  another  business  in  competition  or 
rivalry  with  that  of  his  firm,  thereby  depriving  it  of  the 
benefit  of  his  time,  skill  and  fidelity,  without  being  ac- 
countable to  his  co-partners  for  any  profit  that  may  ac- 
crue to  him  therefrom;  that  he  cannot  l>e  permitted  to 
secure  for  himself  that  which  it  is  his  duty  to  obtain,  if 
at  all,  for  the  firm  of  which  he  is  a  member;  nor  can  he 
avail  himself  of  knov  ledge  or  information  which  may 
be  properly  regarded  as  the  property  of  the  partnership, 
in  the  sense  that  it  is  available  or  useful  to  the  firm  for 
any  purpose  within  the  scope  of  the  partnership  busi- 
ness." 


24  American  Correspondence  School  of  Law. 

It  is  the  right  of  each  partner  to  share  in  the  manage- 
ment of  the  business,  unless  otherwise  agreed  upon.  The 
books  and  accounts  are  to  be  accessible  to  the  partners 
alike.  The  partners  are  not  entitled  to  compensation 
for  services  rendered  the  firm,  other  than  their  share  of 
the  profits,  unless  an  agreement  to  that  effect  is  ex- 
pressly or  impliedly  agreed  upon. 

XV. 

Liability  of  Partners. 

Partnership  contracts  at  law,  as  distinguished  from 
equity,  are  considered  joint,  and  are  neither  several,  nor 
joint  and  several.  Hence  in  suits  against  the  firm  all 
the  partners  should  be  joined  unless  out  of  the  juris- 
diction or  bankrupt.  A  judgment  against  one  partner 
on  a  firm  obligation  releases  the  other  partners,  as  it 
merges  the  joint  liability  in  the  judgment,  but  in  a 
number  of  the  states  the  statutes  tend  to  make  the  joint 
action  both  joint  and  several.  Apparently  opposed  to 
the  principle  of  the  common  law  that  partnership  obliga- 
tions are  joint  is  the  further  principle  that  each  partner 
is  responsible  in  solido  for  all  the  debts  of  the  firm.  The 
action  to  establish  the  liability  is  joint,  but  the  liability 
itself  is  several.  Hence  each  partner  in  a  general  part- 
nership is  personally  and  individually  liable  for  the  en- 
tire firm  debt,  however  arising.  A  judgment  against 
the  firm  may  be  satisfied  out  of  one  or  more  of  the  part- 
ners' individual  property.  Such  burdened  partner  may 
enforce  contribution  against  his  co-partners. 

All  the  members  of  the  firm  are  liable  for  the  torts 
of  one  member:  1.  When  they  authorize  it  or  in  any 
way  joined  in  its  commission;  2.  When  they  have 
adopted  it,  either  expressly  or  by  retaining  the  benefits 


thereof;  and  :\,  When  it  was  committed  by  a  partner 
while  acting  in  the  ordinary  scope-  of  the  partnership 
business,  and  as  a  part  of  his  employment.  The  linn  is 
also  liable  for  all  negligent  aets  of  its  sen  ants  and 
agents,  as  are  all  other  principals.  But  for  tortious  or 
criminal  acts  of  a  partner,  agent  or  servant,  without  the 
scope  of  the  business  or  employment,  the  firm  is  not 
liable.  In  eases  of  tort,  the  liability  of  the  firm  is  joint 
and  several,  and  the  action  may  be  brought  against  one, 
or  more  or  all. 

XVI. 

Actions  l>n  and  Af^niimt  the  Finn. 

A  partnership,  not  being  recognized  in  law  as  a  per- 
son, cannot  sue  or  be  sued  in  the  firm  name.  Actions 
upon  firm  liabilities  or  demands  must  be  brought  by  or 
against  the  individual  partners,  except  in  those  states 
where  the  statutes  authorize  such  suits  in  the  firm  name . 
In  actions  by  the  firm,  all  the  partners  must  join  as 
plaintiffs,  except:  1.  Dormant  and  nominal  partners  arc 
proper,  but  not  necessary,  parties  plaintiff.  2.  Where  a 
contract  is  under  seal,  only  those  parties  named  therein 
can  sue.  3.  A  partner  may  and  sometimes  must  sue 
alone  on  contracts  made  in  his  name.  4.  When  the  con- 
tract is  a  negotiable  instrument,  only  the  parties  named 
in  the  instrument  can  sue  thereon. 

In  actions  upon  a  firm  liability,  all  the  partners  should 
be  joined  as  defendants  except:  1.  Dormant  and  nomi- 
nal parties  are  proper,  but  not  necessary  parties  defend- 
ant. 2.  Under  statutes  making  partnership  obligations 
joint  and  several,  all  or  any  of  the  parties  may  he  sued. 
3.  In  an  action  for  a  firm  tort,  the  partners  may  IK* 
sued  jointly  or  severally.  4.  When  a  contract  is  made 
in  the  name  of  one  partner,  such  partner  may  or  must  IK- 


26  American  Correspondence  School  of  Law. 

sued  alone  in  the  same  cases  that  any  agent  may  or  must 
be  sued  alone  upon  a  contract  made  by  him  for  his  prin- 
cipal. 

XVII. 

Actions  Between  Partners. 

No  action  at  law  lies  between  partners  to  enforce  an 
obligation  between  the  firm  and  a  partner  except:  1. 
Where  the  partnership  was  for  a  single  completed  trans- 
action. 2.  Where  there  is  but  a  single  unadjusted  item 
of  accounts.  3.  Where  the  action  is  to  recover  a  final 
balance  after  termination  of  the  partnership. 

Nor  will  an  action  at  law  lie  between  two  firms  with  a 
common  member. 

Partners  may  of  course  sue  each  other  in  regard  to 
matters  unconnected  with  the  firm  as  freely  as  other  in- 
dividuals. 

As  a  general  rule,  the  remedy  between  partners,  until 
final  settlement  of  accounts,  is  exclusively  in  equity,  and 
in  the  granting  of  equitable  remedies  in  suits  between 
partners  the  ordinary  considerations  govern.  Equity 
courts  will  also  grant  injunctions  to  protect  a  partner 
against  injurious  acts  of  his  co-partners,  either  before 
or  pending  or  after  dissolution  of  the  partnership. 

XVIII. 

Dissolution  of  Partnership. 

A  partnership  may  be  dissolved  in  three  ways:  First, 
by  operation  of  law.  Second,  by  act  of  parties.  Third, 
by  decree  of  court. 

A  partnership  is  dissolved  by  operation  of  law  upon 
the  happening  of  any  of  the  following  events:  1.  Death 


27 

of  partner.  2.  Insolvency  or  bankruptcy  of  partner  or 
linn.  .*{.  Marriage  of  feme  .vo/r  partner,  except  where 
her  disabilities  have  been  removed  by  statute.  4.  Events 
rendering  continuance  of  partnership  illegal,  such  as  the 
enactment  of  a  law  prohibiting  the  sale  of  intoxicating 
liquor,  where  previously  a  legally  licensed  trade. 

A  partnership  may  be  dissolved  by  the  act  of  some 
or  all  of  the  partners,  in  the  following  cases:  1.  Where 
the  stipulated  term  has  expired,  or  the  object  of  the  part- 
nership has  been  accomplished.  2..  Where  the  partners 
mutually  agree  to  a  dissolution.  .'J.  Where  one  partner 
gives  notice  of  dissolution.  4.  Where  there  is  a  change 
in  membership,  o.  Where  one  partner's  share  has  been 
transferred. 

A  partnership  will  be  dissolved  by  decree  of  a  court  of 
equity,  where  sufficient  cause  is  shown.  Fraud  in  the 
formation  of  the  partnership,  insanity  of  a  partner, 
hopelessness  of  success  and  misconduct  of  a  partner  are 
typical  grounds  for  the  granting  of  such  decree. 

The  proper  method  of  exercising  the  right  to  dissolve 
a  partnership  by  the  act  of  one  or  all  the  partners  is,  by 
notice  to  that  effect,  to  the  other  partners,  to  creditors  of 
the  firm  and  to  third  persons.  Notice  is  necessary  in  all 
cases  except  death  of  a  partner.  Actual  notice  should 
be  given  creditors  and  notice  by  publication  to  other  per- 
sons. 

After  dissolution,  a  partner's  authority  to  bind 
his  co-partner  is  limited  to  acts  nccrssary  or  proper  for 
the  winding  up  of  the  partnership  a  flairs.  Hy  mutual 
agreement,  the  partners  may  delegate  exclusive  author- 
ity to  one  or  more  of  their  nnmlxr  to  wind  up  and  set- 
tle the  firm's  affairs.  I'pon  the  death  of  a  partner,  the 
surviving  partner  or  partners  have  the  exclusive  right  of 


28  American  Correspondence  School  of  Law. 

possession  and  control  of  the  joint  property  for  the  pur- 
pose of  winding  up  the  partnership  business,  and  may 
do  any  act  necessary  or  proper  for  the  purpose. 


XIX. 

The  Partners'  Equitable  Lien. 

The  partners  have  the  right  to  have  the  assets  of  the 
firm  applied  to  pay  firm  debts,  and  this  is  called  or 
amounts  to  an  equitable  lien  on  the  partnership  property 
before  or  after  dissolution  to  have  such  property  or  as- 
sets applied  to  firm  liabilities,  and  a  like  lien  exists  to 
have  the  surplus  assets  paid  to  themselves  in  proper  pro- 
portion. This  lien  of  each  partner  exists  against  all  other 
partners  or  persons  claiming  through  them  as  executors, 
creditors,  assignees  and  the  like,  and  extends  to  all  sorts 
of  firm  property. 

XX. 

Winding  up  of  a  Partnership. 

Solvent  p'artners  may  voluntarily  close  up  their  busi- 
ness, and  insolvent  partners,  when  they  cannot  agree,  or 
conflicting  claims  arise  must  resort  to  a  court  of  equity. 
In  general  the  method  of  a  partnership  accounting  is  as 
follows : 

1.  Ascertain  how  the  firm  stands  toward  all  persons 
not  partners. 

2.  Ascertain  what  each  partner  is  entitled  to  charge 
in  account  with  his  co-partners,  including  (a)  what  each 
has  brought  in,  whether  as  capital  or  advances;  (b)  what 
c?.ch  should  have  brought  in  but  has  not;  (c)  what  each 
has  taken  out  more  than  the  others. 


3.  Apportion  profits  to  l)e  divided,  or  losses  to  be 
made  up,  and  ascertain  what  each  lias  to  pay  to  the  others 
so  as  to  settle  cross  claims. 

When  the  accounting  is  completed  the  assets  are  dis- 
trihuted  in  the  following  order: 

1.  In  paying  the  debts  due  third  persons  by  the  firm. 

2.  In  repaying  to  each  partner  his  advances. 

3.  In  repaying  to  each  partner  his  capital. 

4.  The  balance  being  distributed  as   profits,  and  in 
e(jiial  proportion  unless  a  contrary  agreement  IK?  shown. 

Firm  creditors  are  entitled  to  priority  of  payment  out 
of  the  firm  property,  and  individual  creditors  have  prior- 
ity in  individual  property.  After  individual  creditors 
are  satisfied,  firm  creditors  may  have  recourse  to  individ- 
ual property,  and  their  claims  take  precedence  over  in- 
dividual claims  of  other  partners.  Individual  creditors 
may  have  recourse  to  their  debtor's  share  of  what  re- 
mains of  the  partnership  property  after  payment  of  firm 
debts.  Partners  who  have  had  hoiia  fide  dealings  with 
the  firm  in  their  individual  capacities  are  considered  as 
linn  creditors,  and  have  equal  rights  with  other  firm 
creditors. 

Losses,  in  the  absence  of  agreement,  are  shared  in  the 
s:ime  proportion  as  profits.  I  f  sonic  of  the  partners  are 
insolvent  the  entire  loss  falls  upon  the  solvent  partners. 

The  statute-  of  limitations  is  not  technically  a  bar  to  a 
suit  for  an  accounting,  but  if  a  great  length  of  time  lias 
elapsed  without  action  on  the  part  of  the  complainant. 
the  court  will  refuse  to  entertain  the  suit  on  the  ground 
of  ladies.  When  the  partnership  accounts  have  I 
settled  and  decree  rendered.  theV  will  not  hi  n  'pcned 
unless  within  a  reasonable  time  and  upon  proof  of  fraud 


30  American  Correspondence  School  of  Laic. 

or  error  as  to  some  matter  unknown  to  the  complaining 
party  when  it  was  committed. 


XXI. 

Li- m  ited  Partn ersh ips. 

Limited  partnerships  exists  in  all  the  states  by  virtue 
of  the  statutory  law,  but  are  unknown  to  the  common 
law.  All  the  requirements  of  the  statutes  must  be  com- 
plied with.  Their  chief  object  is  to  enable  capitalists  to 
employ  their  wealth  in  trade  without  taking  an  active 
part  in  the  management  of  the  business,  and  without 
risking  more  than  the  sum  originally  subscribed,  and  at 
the  same  time  to  secure  the  co-operation  of  men  of  in- 
tegrity and  ability,  but  without  means.  They  usually 
require  the  execution  and  filing  of  a  certificate  stating: 
1 .  The  name  under  which  such  partnership  is  to  be  con- 
ducted. 2.  The  general  nature  of  the  business  to  be 
transacted.  3.  The  names  and  places  of  residence  of  all 
the  partners,  both  general  and  special,  distinguishing  be- 
tween them.  4.  The  amount  of  capital  each  partner  has 
contributed  to  the  common  stock.  5.  The  dates  at 
which  such  partnership  is  to  commence  and  terminate. 
Such  certificate  must  then  be  acknowledged  before  the 
proper  officer  by  the  person  signing  it,  and  be  recorded 
with  some  officer  named  by  the  statute  and  a  copy  there- 
of published  as  required  by  the  statute.  Also,  generally, 
an  affidavit  is  required  to  be  filed  stating  that  the  sums 
to  be  contributed  by  the  special  partners  have  actually 
been  paid  in  and  in  cash.  In  some  states  they  may  carry 
on  any  kind  of  business,  in  others  they  cannot  engage  in 
banking  or  insurance.  If  the  statutes  are  not  complied 
with  the  partners  become  general  partners. 


XXII. 

Limited  Partnership  .  /.v.vor/V///o//.v. 

Some  states  provide  by  statute  for  limited  partner- 
ships associations.  They  are  neither  partnerships  nor 
corporations  hut  resemble  the  latter  more  than  the  for- 
mer. In  Ohio,  not  less  than  three  nor  more  than  twenty- 
five  persons,  may  unite  in  the  conduct  of  any  lawful 
business,  except  banking  or  real-estate,  and  by  comply- 
ing with  certain  statutory  regulations,  no  one  of  such 
persons,  shall  be  liable  for  the  debts  of  such  association 
beyond  his  subscription.  The  requirements  for  forma- 
tion are  similar  to  those  required  for  limited  partnn-- 
ships,  and  the  name  of  the  association  is  to  be  used  in  all 
matters  and  followed  by  the  word  ''limited."  I  'nlc.ss  tin- 
statute  is  strictly  complied  with  such  an  association  be- 
comes a  general  partnership. 


